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I've been waiting a long time to see this happen. Seems like it's long overdue.

F.T.C. Files First Legal Case Against Sexually Explicit Spam By THE ASSOCIATED PRESS

Published: January 12, 2005

WASHINGTON, Jan. 11 (AP) - The Federal Trade Commission said on Tuesday that it had won a court order to shut down illegal advertising for six companies accused of profiting from thousands of X-rated e-mail messages directing people to their online pornography sites. The move was the agency's first legal case involving sex-related Internet spam.

On Jan. 5, a federal judge in Las Vegas granted the commission's request for a restraining order against the companies, their executives and an affiliate after they were accused of violating federal laws governing unsolicited commercial e-mail, commonly known as spam.

The agency said that it would seek a permanent injunction shutting down the network's illegal e-mail ads.

It is the first time the agency has taken legal action under a rule that requires a label in the subject line of sexually explicit e-mail messages. The law also holds others liable for operating Web sites that benefit from fraudulent pornographic spam.

The Nevada companies named in the complaint were Global Net Solutions Inc., Open Space Enterprises Inc., Southlake Group and W.T.F.R.C. Inc., which does business as Reflected Networks Inc. Also named were Global Net Ventures Ltd. of London and Wedlake Ltd., which the F.T.C. said was based in Riga, Latvia.

The executives of those companies were named in the complaint along with an individual, Paul Rose. The F.T.C. said Mr. Rose sent hundreds of thousands of illegal spam e-mail messages directing recipients to the sites operated by the companies named in the filing.

The complaint said the messages did not include the required “Sexually Explicit” warning in the subject line, falsely promised free membership to the Web sites and prevented recipients from stopping the unwanted e-mail messages.

Such actions would be in violation of the federal antispam law, called the Can-Spam Act. Spammers who violate the rule face possible imprisonment and criminal fines of up to $250,000 for individuals and $500,000 for an organization.

Tracking violators can be difficult because spammers often try to escape being identified by using forged return addresses or by bouncing their e-mail messages through unprotected relay computers on the Internet.

ChoicePoint, a fast-growing repository of information ranging from driving and property records to insurance claims, said scammers posing as legitimate businesses opened 50 accounts and obtained access to various databases used for pre-employment background checks and public records searches.

”We think it's just the tip of the iceberg,“ said Los Angeles County Sheriff's Lt. Paul Denn.

The sheriff's office charged a 41-year-old Nigerian man, Olatunji Oluwatosin, with six felony counts including identity theft. Yesterday in Los Angeles County Superior Court, Mr. Oluwatosin pleaded no contest to a single count of unlawful use of personal identification, and was sentenced to 16 months in state prison. Michael Enger, a public defender who represented him, said investigators won't get any help from his client. ”He's not cooperating in any way whatsoever,“ he said.

***

Investigators said they believe data on up to 400,000 individuals may have been compromised. Police are seeking others involved in the alleged scam. ChoicePoint disputes that number and contends that closer to 145,000 personal records may have been breached, some of them duplicative. The Alpharetta, Ga., company has notified those it believes may have been affected. Police are still investigating to determine whether the identity thefts resulted in any financial losses.

***

Sen. Bill Nelson, a Florida Democrat, yesterday ordered his staff to study possible legislation that would expand the Federal Trade Commission's regulatory power to oversee information brokers the way it does companies that handle financial and medical records.

ChoicePoint was also the subject of controversy in 2000 over the involvement of a subsidiary, Database Technologies, in a purge by the state of Florida of alleged felons on its voter rolls. It was later discovered that many of those purged in fact weren't felons and actually had the right to vote.

Marc Rotenberg, executive director of the Electronic Privacy Information Center in Washington, D.C., a non-profit privacy watchdog group, wrote to the FTC in December seeking an investigation of ChoicePoint and other companies for compliance with the Fair Credit Reporting Act, which requires credit-report providers to vouch for the accuracy of their information. Now, he says, ”this ends the discussion on whether self-regulation works."

Sen. Dianne Feinstein, Democrat from California, recently introduced a bill that would require notification of consumers when their personal data have been compromised. A similar law in California, the only one in the nation, is the reason why ChoicePoint's fraud case came to light. The company said that even though the requirement to notify affected consumers exists only in California, it is notifying consumers throughout the U.S.

The current investigation involving ChoicePoint began in October when the company found the 50 accounts it said were fraudulent. According to the company and police, criminals opened the accounts, posing as businesses seeking information on potential employees and customers. They paid fees of $100 to $200, and provided fake documentation, gaining access to a trove of personal data including addresses, phone numbers, and social security numbers.

The account holders then made unauthorized address changes on at least 750 people, according to California police. Identity thieves often use this method to establish credit accounts that they can then use to make fraudulent charges, though it isn't clear whether any bogus charges were made in these specific cases before discovery of the fraud.

ChoicePoint, which was spun off from credit-report company Equifax in 1997, has rapidly transformed itself into a provider of information to various industries, from direct marketers to insurance companies and law enforcement. In the U.S., the company says it stores 19 billion public records.

Putting Some Skin in the Game: Creative Videogame Fans 'Hack' The Sims, Others To Make Clothing Optional By VAUHINI VARA THE WALL STREET JOURNAL ONLINE

February 18, 2005 8:16 a.m.

Kamma Nielsen spends much of her time caring for her children and grandchildren. But lately, the 56-year-old has been devoting more energy to her favorite hobby: designing naked characters for The Sims, a popular computer game that lets players guide virtual people (a.k.a. Sims) through everyday life.

Ms. Nielsen is a minor celebrity in a subculture of game enthusiasts who are trying to overcome the G-rated boundaries of off-the-shelf games. Her R-rated Web site lets users download the ”skins,“ or nude character designs, into their own desktop versions of the game.

”My husband thinks I'm silly, but he says it's nice I'm having fun," says Ms. Nielsen, who lives in Denmark with her husband and their three youngest children.

New York artist Love Ablan has created dozens of nude characters and racy settings for The Sims, such as this censored hot tub scene. Electronic Arts Inc., the company behind the Sims franchise of games, has long condoned the development of customized content for its Sims games. “We don't host naked Sims on our own site, and we try not to link to that stuff. But we also try not to pass moral judgments upon our users,” says Caryl Shaw, manager of online services for Maxis, the EA unit that produces the Sims games. “I mean, they make some pretty cool stuff.”

But some game publishers aren't amused by the titillating tinkering. Tecmo Inc. last week sued the administrators of a Web site called ninjahacker.net1, whose users were sharing nude skins and other modifications for a game called Dead or Alive Xtreme Beach Volleyball, which features bikini-clad women on a beach. The game is played on Microsoft Corp.'s Xbox console.

Tecmo says people used the site to illegally copy and share the software blueprints, or source code, of its game, which it spent millions of dollars to create. “It's a big business,” says John Inada, general manager of the Torrance, Calif.-based subsidiary of Japan's Tecmo Ltd. “We won't just give away our trade secrets for nothing.”

Mike Greiling, who ran ninjahacker.net, declined to comment on the lawsuit brought by Tecmo, but his attorney released a written statement. “Mr. Greiling did not copy any Tecmo software source code, did not compete with Tecmo, and did not profit from the message board,” according to the statement. “Any modifications to the games done by members of the message board were not in violation of any copyrights or other rights of Tecmo.”

Those who design nude characters, meanwhile, say it's a testament to their love of the games — not an attempt to upset the game publishers. They argue that they're likely helping to drive interest in games like The Sims, one of the best-selling PC games of all time. Some critics of Tecmo's efforts to stop the game modifications have pointed out in online forums that the game's characters were barely clothed in the first place.

“We do come pretty close to nude, but we do leave some patches of fabric in certain areas,” Mr. Inada of Tecmo counters.

In comparison, Sims characters are decidedly modest: They are almost always clothed, even when sitting using the restroom. When they take showers, a pixelated patch blurs the R-rated areas, even in the mirror's reflection. Sex was barely mentioned in the first version of the game. With the introduction of The Sims 2 in September, “woohoo,” as the act is known in the game, became a quick, under-the-covers wrestling match.

But “woohoo” wasn't enough for some players. Sims enthusiast Wesley Howe, a 53-year-old retired telecommunications engineer, says he spends up to five hours a day designing modifications of the game — much more time than he spends actually playing it. Mr. Howe posts his naked characters and other designs for free online. Others charge for their creations — users have to pay about $5 a month to download racy Sims modifications from the “JD's SIMulated” Web site.

Enthusiasts use programs like Adobe Systems Inc.'s Photoshop image-manipulation software, and free programs with names like BodyWarp created by fellow game enthusiasts. Incorporating the modifications into games requires some technical know-how. For computer games like The Sims, users download and install an update to the program. For console-based games, like the beach volleyball game for the Xbox, users must jump through elaborate hoops, including installing a special “mod” chip in their machines and hooking the boxes up to the Internet.

Most of the sites featuring the nude modifications issue warnings saying they contain adult content intended for those over 18 years old, but generally don't use the same age-verification aimed at keeping kids away from pornographic sites.

Of course, not all game modifications are naughty in nature. In the broadest sense, a “hack” is software that manipulates the way a game is played, while “skins” and “meshes” can change the look of any character or object. Mr. Howe spends much of his time building furniture for The Sims, for example, while others swap weapons and potions for fantasy games. Many of the skins for Tecmo's beach volleyball game dress the characters up as comic book characters and movie villains, rather than dressing them down. Meanwhile, some hackers trade programs that let them control various aspects of games — suppressing characters' bladders, blessing them with eternal youth or letting them skip to a new level, for example.

Still, for those who seek a bit of titillation, there are plenty of hacks that deliver stripped, sex-obsessed characters. Though nude characters for The Sims are the most readily available, they are also available for other games like BioWare Corp.'s Neverwinter Nights and Bethesda Softworks LLC's Morrowind. With Neverwinter Nights, a medieval fantasy game, designers use their imaginations to design naked dwarves, gargoyles and giants, and seek feedback in online forums.

The latest challenge for Sims hackers has been to create an enhanced male nude for The Sims 2. (The three-dimensional graphics in the new version make it tougher to modify characters.) Sims players have also teamed up to create beds, rugs and chairs that are programmed to show graphic sex scenes.

Love Ablan, a 30-year-old artist in New York, started creating nude versions of herself and her girlfriend two years ago. Then, she started finding celebrity skins online, stripping them and putting them all in a Sims house filled with sex-friendly furnishings. “It's a sort of funny way to act out fantasies,” she says. Write to Vauhini Vara at vauhini.vara@wsj.com2

On January 20, 2005, in Pennsylvania Federal District Court, Judge Gary L. Lancaster dismissed the 10-count criminal indictment charging Extreme Associates, Janet Romano, aka Lizzie Borden, and Robert Zicari, both of California, with violating the Federal obscenity laws. The opinion, 45 pages long is attached in pdf format. If you don't have a pdf reader, check out download.com. It finds the obscenity laws of the United States unconstitutional, and will of course be appealed by the Justice Department. Gonzales has vowed to go after online porn, and this case provides a perfect opportunity.

“Some may say that slow is good–and they may be right on some days — but I am here to tell you that fast is better… It will always be better to be shot out of a cannon than squeezed out of a tube…”

Hunter S. Thompson was a true original, a rebel who would have felt up to drinking with Kissinger, Churchill, Marilyn, Castro, any one of those larger-than-life people. Looking through his eyes, the world looked different. You could feel a crazy grin spreading across your face as he described the process of powerful drugs racing through one's body, or warring g-forces tearing at one's frame while in the throes of some vehicular acrobatic maneuver entirely necessary for a person of the male species.

Whether reporting from Saigon or Las Vegas or the beaches of California or the swirling maelstrom of downtown Chicago, Thompson brought his humanity, his self-lampooning bravado, his reflection of all human sins on himself. If humans did it, he would do it, and tell us about what it was like.

Guns, sex, drugs, booze? Why not, he seemed to say — you only live once and then who gives a shit. Did he mean it? I always wondered. I think I concluded he used his self as a sketchpad to caricature everything he saw in human beings. Before he accused others of sin, he recognized it in himself.

Many speak sentimentally at times like these, but what good will it do? He is gone, and in this way he becomes exactly like everyone else. We shall just have to read his books a little more closely now, and pour a little draught of our libation out in an offering to the souls of all the writers and artists since the beginning of time who have made it interesting to be human.

MANDELBROT'S "THE (MIS)BEHAVIOR OF MARKETS": AN INTERVIEW WITH BENOIT MANDELBROT, by Charles Carreon

12:30 am, March 7, 2005

I'm about 80% through The (Mis)Behavior of Markets right now, and have found it extraordinarily interesting, illuminating, and readable.

Prof. Mandelbrot's primary thesis is that current models of financial theory are defective because they are based on a false supposition — that investment outcomes conform to the simple distribution of the bell curve. Now what the hell does that mean? Well, the bell-curve, it turns out, illustrates the distribution of outcomes of all types of events. People's heights, weights, and intelligence are distributed according to a bell curve. For example, if IQs are measured, left to right, high to low, with the numbers of persons having the corresponding IQ graphed vertically, the result is a bell curve. The curve is high in the middle because there are lots of people of average intelligence, and low on the left side, because relatively few people have very low IQs, and low on the corresponding right side, because relatively few people have very high IQs. So that is a bell curve distribution.

Bell curve distributions result from graphing the outcomes of processes like how much money you will make if you bet your friend $1 on every coin flip and flip 100 times. You don't each end up with the same amount you started with. Sometimes you're up, sometimes she is. If you play the game a hundred times, and graph the outcomes, though, you'll get a bell curve distribution. One key factor here is that, regardless of the last flip result, you have an equal likelihood of winning or losing this time. “The price changes, in the language of statistics, form a sequence of independent and identically distributed random variables.”

These types of outcome-sequences are governed by “a random walk” process. To describe a “random walk” process, probability theorists use this metaphor: “Suppose you see a blind drunk staggering across an open field. If you pass by a gain later on, how far will he have gotten? Well, he could go two steps left, three right, four backwards, and so on in an aimless, jagged path. On average — like in the coin toss game — he gets nowhere.” So if you were asked to bet on where the drunk would be in five minutes, you'd probably be most safe saying “right where he is, or within ten feet of there.” And if we asked you, “How much will the dollar be worth tomorrow in euros?” your best answer would be, “Whatever it is worth today.”

Alas, that is not good enough for the investor, who desperately wants a crystal ball in which all tomorrow's prices are revealed. So the quest for financial modeling and projection goes on. The father of the fundamental modeling structure on which most of the world's financial theory is based, according to Mandelbrot, was a Frenchman who really didn't get much encouragement for his work from other number-jugglers in the French academy, which included the formidable Poincare.

In 1900 Louis Bachelier, whom Prof. Mandelbort describes as “a brilliant but undervalued mathematician,” published a thesis on French government bonds that paid interest “in perpetuity,” and derivatives of that debt that had exotic names like “call o' mores” and “contangoes.” Says Mandelbrot, “Bachelier was intimately familiar with the arcana of these markets, and [tried] to develop formula to price these complicated derivatives.” The search lead him to a creative discovery.

"Mandelbrot and Hudson“

Nearly a century before, the great French mathematician Jean Baptiste Joseph Fourier had devised equations to describe the way heat spreads. Bachelier knew the fomulae well from his physics lectures. He adapted them to calculate the probability of bond prices moving up or down, and called the technique ”radiation of probability.“ Strangely, it worked.

So prices move like heat radiates. Hmmmm. That notion is familiar to us now, if we have been reading a little chaos theory. By borrowing a pattern that reflected the dynamics of thermal diffusion, Bachelier threw light on the nature of bond pricing processes. This and related insights have been guiding investment advisors, fund managers, bankers, and traders in making financial decisions. Further evolutions of Bachelier's work have resulted in great refinements of financial models which are, however, often confounded in times of financial turmoil that regularly recur.

This is because, just as Newtonian physics cannot describe quantum phenomena, in the same way, models based on bell-curve outcome distributions cannot be used to describe the full range of financial market movements. Why? Because financial outcomes, in the first place, do not follow a bell-curve of distributions.

By that we mean that there are too many big price moves. If you watch the price changes in various stocks, for example, and you measure each day the percentage of price movement from the previous day, and you graph all those outcomes, you do not get a bell-curve. You get a bell curve with ”fat tails,“ that is — way too many price-changes that are way too large. The financial waters, in other words, are choppier than hell.

Second, price changes from one moment to the next are not following a true random walk — they are trending — unpredictably, but they are trending. In other words, the drunk is likely to continue staggering in the same direction for a while, until he starts a new trend.

Because of this basic defect in Bachelier-derived economic analysis, Mandelbrot describes our modern captains of finance as competent sailors, as long as they don't hit a storm. In that case, all bets are off, and the best of them will end up swimming.

So far in the book, Mandelbrot hasn't addressed the issue of how lying and deception affect the financial markets. It would be hard, for example, to properly graph a series of coin toss outcomes if someone kept cheating, or you kept losing count of the number of tosses. In today's financial markets, such problems are common, due to incompetence and fraud. How many ”market corrections" occur when the truth comes out about declining profits, a truth that has been known for many months, concealed with financial manipulations, layoffs, debt-rescheduling, and mumbo jumbo? Although natural processes illuminate the structure of monetary systems, and provide fertile inspiration for mathematical models, human deceptiveness may throw a monkey wrench into the process of understanding this central pillar of human society.

From the UK Telegraph

The geometry of Mandelbrot(Filed: 17/10/2004)

The founding father of fractal theory warns that another Great Crash is a real threat. Martin Baker meets him

Preposterous though it seems, there is something of the lone gunslinger about Benoit Mandelbrot. He is Sterling Professor of Mathematical Sciences at Yale University. And, yes, he is turning 80 next month. But if ever a man fixed the establishment in the eye and shot from the hip, it is Mandelbrot.

Next week is the 75th anniversary of the Wall Street Crash of 1929 - now consider this extract from the book Mandelbrot is publishing next month: "The financiers and investors of the world are, at the moment, like mariners who heed no weather warnings."

No, no, no. Surely it couldn't happen again? Conventional wisdom tells us that we understand risk so much better now. Those clever hedge fund chappies have got it all sewn up, surely. There has been the occasional disaster, such as the collapse of the huge US hedge fund Long Term Capital Management in the late 1990s. But we all survived. The investment industry has a sophisticated understanding of the riskiness of the market, and by using analytical tools such as chaos theory, the risks are managed and controlled.

Unfortunately not, according to Mandelbrot. And he should know. As the founder of fractal geometry and the discoverer of the Mandelbrot set (pictorially represented as beautiful, complex swirls of coral) Mandelbrot is acknowledged as the father of chaos theory. Here are his views of the current state of play: "A few fund managers have experimented with these concepts [of price dependence, whatever that is, and volatility]. They often call it chaos theory - though strictly speaking that is marketing language riding on the coat-tails of a popular scientific trend. In reality, the mathematics is still young, the research barely begun, and reliable applications still distant."

Mandelbrot has tweaked a few tails in the academic world, too. James Gleik, author of one of the many books on chaos theory, acknowledges Mandelbrot's contribution to the doctrine, while calling him "exasperating and indispensable".

So what is the principal theory of this near-octogenarian, so often described as a maverick? It was clearly a good idea to find out before having lunch with him.

Fractal geometry is a way of describing complex, irregular shapes that repeat themselves in nature. Take a leaf on a fir tree, for example. The leaf itself is a mini-me version of the whole tree. And if you look at the individual bits of the leaf, they look like the leaf that looks like the tree. So you have a complex mathematical formula that describes a pattern that keeps repeating itself. Thus a single formula describes lots and lots of data. This is the kind of thing that makes mathematicians happy.

The practical applications of the theory are that it can be used to model and describe, though not predict, a huge number of complex phenomena such as coastlines, water and air turbulence, galaxy clusters, and the fluctuations of stock markets and commodity prices (there is an hilarious passage in the book describing early research on cotton price fluctuations that reads like a comedy thriller). By describing such phenomena, fractal geometry moves on from Euclidian geometry, which is confined to smooth shapes and planes.

Armed with this very basic understanding of his work, I meet the man himself in a fantastically noisy French restaurant. Mandelbrot is tall, fairly robust, and has the thick-lensed spectacles of academic cliche. He has a Clouseau-esque accent, despite having worked at IBM in the US since 1958. But there is little of Peter Sellers about this man. His mind is like a steel trap.

It turns out the publication of The (Mis)Behaviour of Markets - A Fractal View of Risk, Ruin and Reward is not entirely designed to upset the financial community. Mandelbrot, after all, is a teacher with a didactic urge: "Part of my business may be to return mathematics and geometry to its role as an instrument to organise and understand the patterns of nature."

At this point readers may be crying out that markets are supposed to be rational phenomena, not natural ones. According to the efficient market hypothesis (a phrase coined by one of Mandelbrot's students, apparently) only rationally relevant information is priced into an asset or market. So what use is a formula that describes the natural world?

Mandelbrot's point is that, whatever the causal factors that go into price movements, markets and prices behave as if they are natural phenomena. He says: "My purpose is always to observe the symptoms and have a model of what is being seen. In the case of markets, it is frightening because there are so many people of great brilliance and extraordinary greed who work there. They don't understand the market, but they understand the numbers."

It is easy to see why Mandelbrot has a reputation for arrogance. He is, simply, very clever indeed, and is impatient with those who aren't. His fractal theory identifies three states of randomness - mild, slow and wild - and he believes that this model describes market behaviour far better than any other theories of randomness.

If he is hard on the financial community, it is because he believes investment managers and advisers are failing investors: "A stockbroker wrote me a very plaintive letter asking why I was giving stockbrokers such a hard time. His argument was that what he did was right 98 percent of the time. Why bother about the events that occur in the rest of the time? The answer is that those events are the ones that really count."

It is said that no one hurries like an old man, and Mandelbrot knows that at 79, time is precious. This only exacerbates his impatience with the financial community: "It is quite clear that some portfolios that were declared to be free of risk turned out not to be. They are very good for 90 percent or more of the time, but at the critical moment, they fail. They are just dreadful. Given the inter-connectedness of things, they may lead to very, very embarrassing complications for the whole world."

His best attempt to save the world, or at least make society aware of its incomprehension of the riskiness of the markets it depends on so much, is probably contained in a book that is surprisingly entertaining (much credit must go to Richard Hudson, the former European bureau chief of The Wall Street Journal, and co-author).

Now Mandelbrot is writing his memoirs - "purely what I remember. I won't research and check dates unless I absolutely have to". They should make compelling reading. Born in Warsaw in 1924, his family moved to Paris in 1936. As a Jew he was lucky to survive the Nazis, and had to move constantly. One possible benefit was the lack of a conventional education (he was tutored by an artist uncle who was also a professor of mathematics).

Mandelbrot says he inherited his independent tendencies from a father who saved his own life by refusing to stay on the road with fellow Jews who had been liberated from an internment camp during the war. Mandelbrot senior set out on his own and took refuge in a wood; those who stayed on the road were strafed by Stuka fighter planes. Following his father's untimely death, the youthful Mandelbrot also learned about the market, selling the crude clothing his father had made to eke out a living at distressed seller prices. "It put food in our mouths," he says.

Mandelbrot was a brilliant student and held a variety of academic positions, before resigning a post in France in 1958 in order to work in IBM's famous ideas factory (a group of oddball intellectuals paid to come up with great innovations). He was already seen as a cross-disciplinarian and a maverick and had created for himself "a very hostile intellectual environment. France does not like people not to belong".

For the last five years he has been at Yale, feted for the long-delayed publication of his paper on fractal geometry. And now, in his memoirs, he's turning those fearsome analytical powers on himself: "There are many things I begin to understand better now."

• The (Mis)behaviour of Markets: A Fractal View of Risk, Ruin and Reward by Benoit B Mandelbrot and Richard L Hudson is published by Profile Books, £18.99

When Arthur Miller died, I noticed that his biography, Timebends, was cited a lot in the New York Times feature on his life. I ordered it from Amazon, and have just started reading it. This little excerpt about his grandfather's last act of diligent self-protection is really funny:

Arthur Miller

His death, while not quite exemplary, has always thrown a certain poetic light on his nature. In his late eighties, believing he was close to his end, he one morning summoned his little wife to his bedside and told her to bring the young rabbi. And indeed he looked to her as he had never looked in their seventy years together. As soon as she could, she brought the rabbi, apparently a new one to the 114th Street synagogue, who sat with the old man and accompanied him in prayers until he fell asleep, whereupon the rabbi left. Hours passed while my distraught greatgrandmother summoned her children to the Harlem apartment two stories up in a brownstone. The old man slept and slept. The doctor who was brought in examined him without waking him and could only confirm what everybody knew, that like everybody else, but sooner than most, he was on his way to Abraham's bosom. The doctor left, and so did the children, who all had their lives to attend to. As the sun was setting, the old man awoke. His wife asked him how he felt, and he lay there trying to understand, apparently, why his head seemed lower than it had before. He slowly turned on his side, massive fellow that he still was, felt under his pillow and felt again, sat up and lifted the pillow and the bedclothes, and finally faced his uncomprehending wife, asking, ”Who took them?“

Following custom in those roughriding years, Great-grandfather kept much of his assets in the form of diamonds, which took less space than cash and were easier to hide. He was apparently in that large minority who did not consider any financial institution a hundred percent honest or safe, along with W. C. Fields, another turn-of-the-century man who made no bones about his cold-eyed view in many a quip and script motif, as well as in his near paranoid distribution of his own money in an enormous number of banks across the country, against the inevitable day when some of them would abscond or plead a fake bankruptcy. In point of fact, just at the time Great-grandpa was reaching under his pillow for his life's savings, colorful or absurd as it may seem, Richard Whitney, head of the New York Stock Exchange and widely esteemed leader of the financial community, was quietly stealing enough to earn him a sentence in Sing Sing-he would not lack for colleagues thereonce the Great Crash had confirmed the suspicions of my greatgrandfather and Fields and exploded the illusions of the trusting majority.

Ill as he was, Great-grandpa definitely remembered stashing his whole little fortune under his pillow and now demanded to know who had been to visit him. His trembling wife reeled off the list, plus, of course, the new rabbi. Commanding her, despite her protests, to help him dress, he took his oak walking stick and, refusing her touch on his elbow, plodded up Madison Avenue from 112th to 114th and into the synagogue, where he found the rabbi seated at a table writing. He said to the rabbi that he would like to have his jewelry back. The rabbi looked up and with a blank expression repeated, ”Your jewelry?" With which the old man raised his stick and brought it down on the rabbi's neck before the poor man could dodge out of the way. Bedlam. But new life had sprung into the old man's sinews as he pursued the rabbi around the room with people trying to grab his flailing rod of righteousness. At last the rabbi faced him, both of them gasping for breath, and with hands raised he backed to the coat draped over his chair, reached into a pocket, and produced a knotted linen cloth. The old man unknotted it with his bent fingers and after a glancing count stuffed it into his own coat and walked out. He got home but barely made it back upstairs through the narrow brown-painted hallway and into his bed. The news had flown, and my mother and her father and a whole troop of heirs quickly assembled and watched as from his pillow he distributed his life among them, then sighed and closed his eyes, never to wake again.

People like to bandy about that the Eskimos have a hundred words for snow. Presumably Colombians have as many to describe cocaine. Certainly the money-users of the world have come up with as many names for money as there are for the most popular illicit substances. People call money a lot of things — bread, cash, moolah, scratch, dead presidents. But the names that people have been using to describe the dollar recently are more like expletives of the financial sort.

Americans are being asked to take more of an interest in our currency. European bankers urge our bankers to get us to be better world citizens, and earn a somewhat larger fraction of what we spend. Are we being urged to be more productive, and sell more goods and services to the rest of the world? If so, perhaps some rethinking is in order, because it's hard to imagine how America could do more to drive the world economy, and if it’s going to continue in the same vein, the world probably can’t afford any more of this economic stimulus.

The Bush doctrine has thrown industrial production worldwide into overdrive by literally blowing up high-tech equipment in the desert, when we’re not driving Humvees and trucks around the dunes using up gas and diesel, driving up the worldwide price of oil. Sales of armaments are increasing worldwide, and now that the proliferation barn door has been left open, the costly search to track and recover wayward fissionable material that might be utilized to set off unauthorized nuclear strikes is on. What with peace breaking out in Palestine, perhaps the Israelis can get busy selling, rather than deploying, missiles, bombs, and other munitions. This worldwide, high-tech, heavy-metal, rocking out comes at some cost. Sun Tzu said “It takes five pounds of food to deliver one pound of food to soldiers in the field.” The ratio in Iraq is without doubt more like a thousand-to-one, if you think about how cheap it would have been to leave all those young people back in America and feed ‘em Big Macs right in their home town. Commodity prices are rising worldwide, as always rise in wartime, and Uncle Sam's current wars incredibly wasteful. Killing is expensive, especially when the victims are being killed individually, one carload at a time, as in Iraq.

High tech has heard the word that terrorism is the new cold war, giving a mammoth boost to biometric technology that will give us — more expensive driver's licenses! SAIC, the San Diego foundation for the preservation of defense industry power and influence in technology, has wasted $180 Million trying to make a computer system for the FBI. I could have told them they’d never pull it off because a computer system can’t run on booze and bullshit. Information sellers like ChoicePoint and Lexis-Nexis are also bringing the economics of the information economy more clearly into focus. We've even given a boost to the drug industry by insulating the world's largest pharmaceutical market from competition under the guise of a “senior prescription drug plan.”

Meanwhile, the magical production of money from the housing market by a succession of refinances driven by the lowest interest rates in U.S. history, and the sale of a new truck to every fool smart enough to know that zero percent interest means what it says, has just about run out of room to expand. The constraints on that expansion are felt whenever the amount of money America borrows drops perilously close to equal to or less than the total amount of money America owes to other countries. Whenever that happens, the dollar drops in value, unless there are compensating factors moving it in the other direction.

Of course, I say the dollar drops in value, but with respect to Chinese money, this is not true. China has declared that its currency, the Rnimbi, shall trade against the USD at a fixed rate. How friendly this is. Our friend China is willing to insist that, even though the European Central Bank, the Swiss, the Japanese, the Canadians, etcetera, all have dropped their valuations of the dollar, our money is worth as much to them as ever. Incredible resilience the Chinese show! American politicians call them godless communists and all manner of horrendous ethnic slurs, and only grudgingly admit them to the World Trade Organization, and interfere with all of their efforts to buy high tech weapons from Israel and South Africa and Eurpoean nations. In return, they lend us all the money we are willing to spend on flat screens, hard drives, cell phones, athletic shoes, and all manner of other treasures. Why? Because nobody else, besides the Japanese, of whom there are appallingly few, and even fewer reproducing, can figure out how to use these gadgets!

Economists define money as M1 plus M2 and M3. I imagine them as various “layers of money” that move around the globe at different speeds, like so many jet-streams of value.

M1: Technically defined this is the sum of: the tender that is held outside banks, travelers checks, checking accounts (but not demand deposits), minus the amount of money in the Federal Reserve float.

M2: The sum of: M1, savings deposits (this would include money market accounts from which no checks can be written), small denomination time deposits (where small is less than $100,000), retirement accounts.

M3: M2 plus the large time deposits (for any of you with more than $100,000 deposits you add to this...). Eurodollar deposits, dollars held at foreign offices of U.S. banks, and institutional money market funds.

They move at different speeds because M3, the money stream containing the big chunks of cash — which includes all accounts over $100,000 — moves a bit slower than M1, which includes speedy money like a lowly twenty dollar bill circulating in a crack house or gambling den, which may flip over twenty times in a day. Much of the money in M1 is in fact the proceeds of crime many times over, and that money moves at a much higher speed than the big money. There are probably dollars that haven't served as the media of lawful commerce in decades. Of course, much of the exclusive M3 money is also criminally derived, for example by looting governments and corporations, laundering money, avoiding taxes, and giving and accepting bribes.

Poor countries don't have a lot of M3 money, by comparison with rich countries like England and Switzerland and the US. M3 money gets traded around in big blocks, slow and sure, and most of the time it sits. M1 money, of which there is a great deal more in poor countries, proportionately, moves very fast by comparison. There is a great deal of M1 money, and a great deal of it serves to fulfill forbidden desires, such as the purchase of contraband, the procuring of disloyalty, and the inducement to commit theft.

Much money is spent to do forbidden things, and that is perhaps a potential barometer of total human iniquity and/or goodness. I have often pondered the notion of the meaning of money in human life. This meaning was seriously cast into doubt during my early life. One group of people, my nanny's family, both poorer and more physically robust than my people, being American Indians, often told me that “money is the root of all evil.” I reported such communications to my father, who characteristically seemed antagonized by the notion. He clarified for me quickly: “Money is not evil. It depends on what you do with it. You can only help people if you have money.” Those were the exact words of my dad, Conrad James Carreon, may peace be upon him. And although technically I believe you can help people without money, in my case, it really helps.

But you can imagine the battle this set up in my mind. Some people that I loved and trusted said money was bad, and my father said it was good. I liked having money, and learned that when we went to Mexico, lots of fun snacks, toys and entertainments were well within my price range. I also felt bad seeing young boys no less worthy than I, shining a pair of shoes for a Mexican peso, the equivalent of twelve and a half US pennies. Of course, you could get a six ounce Coke and two cookies for one peso, or a mighty tasty taco or quesadilla. So it all made sense, kind of. Except why I had so much money when I was still just a kid. My dad conveyed to me the benefit of the greater abundance, and it was a fun, but still perplexing, discovery.

I remember when I learned that taxation was raising the prices of US products in Mexico to double their cost in the US. So rich Mexicans paid through the nose to look like their US models. That shocked me. There didn't seem to be anything fair in even a rich Mexican having to pay twice the price to have a cream-colored Chevrolet Impala with a red interior or other delectable automotive delight. Now I understand subsidies, as in the subsidy that the Mexican government was providing to encourage domestic auto production. At that time, I believe the domestic auto industry was a silly vehicle called “The Borgward,” which was a silly creation turned out by a factory that Mercedes Benz had sold the government. Borgwards were universally despised as owned only by the richest, stupidest plutocrats, for whom political correctness was uppermost. Still, no family, however rich, was so stupid as to own more than one.

The average Mexican had poorer physical conditions than the average American, by far. It seemed to me almost that the majority of Mexican people lived in spartan conditions, and many lived under extremely primitive conditions such as might be seen in the US only on Native-American reservations and a few other pockets of rural poverty. I wondered what could be done to equalize the situation.

Thinking upon the matter, it seemed to my simple young mind that we simply needed to readjust “the wages” that were paid to people in the US and Mexico, to bring them into harmony. I did not even consider how the money to pay the wages was in fact obtained, and that there was no mechanism for setting wages in either country. I could not even conceive that my parents were operating in a world so utterly chaotic. Surely such matters were under someone's control!

But indeed they were not then, and they are not today. The business of managing the world's money is in the hands of some people we call bankers, but less and less do I know what that word means. How it is that one man earns pennies for a day's sweat, and another harvests millions in a single transaction? How can money be so unjust? How can bankers justify these continuing inequities? Should not money begin to operate in a way that facilitates the ending of poverty, misery, of brutal resource competition that wastes lives in war?